True Corporation Public Company Limited (TRUE) Earnings Call Transcript & Summary

Good afternoon, everyone. Welcome to True Corporation's earnings disclosure for the fourth quarter of 2023. My name is Naureen, I'm the Head of Investor Relations. With me today are our CEO, Khun Manat; our Deputy CEO, Khun Sharad; and our core CFO, Khun Nakul. Our presentation and additional documents are available on our Investor Relations website. [Operator Instructions] For now, I would like to hand it over to Khun Manat to start our presentation.

Okay. Thank you, Khun Naureen. Good afternoon, everyone. Thank you for joining us today. Let me start with a brief summary of our performance details to be touched on later by our co-CFO, Khun Nakul, then I'll go through our strategic focus and outlook this year. Last year, we stepped forward as the leading teleco tech company in the country, leveraging combined strength and True -- and the expertise of True and dtac as well as support from our major shareholders. This was a challenging year with slower-than-expected economic growth. Our combined effort and accelerating the amalgamation, integration has enabled True to deliver ongoing topline growth and consecutive improvement of the EBITDA. The service revenue was flat in line with the guidance, progress well with growth in every quarter since amalgamation completion in March. EBITDA consistently grew for the fourth consecutive quarter in Q4. At the same time, the synergy realization has progressed well and ahead of our target. We achieved it over THB 12.9 billion of gross synergies since the amalgamation, thanks to the organization and every modernization initiative. We laid a solid foundation on strengthening infrastructure, customer touch point, organization structuring and digitalization having the way for the higher synergy realization this year. [indiscernible] significantly improved from the network modernization, 5G and 4G roaming across our frequency bands and optimization of our customer experience and sales channels. Our value should remain intact with higher customer satisfaction [indiscernible]. We have also activated a performance dividend culture and co-creation approach that involves our employees in shaping the company from the ground up. Since then, we have seen a significant improvement in organization efficiency and employees engagement. We are now in a prime position to accelerate growth and deliver greater value to our stakeholders. For the DJSI, this is once again ranked the first in the world's telecommunication industry for the DJSI for 6 years in a row in 2023. This international foundation has proven our ongoing commitment to innovation, good governance and developments in economy, society and environment. Let me hand over to Khun Nakul to walk through our financial performance in detail.

Thank you so much, Khun Manat. Good afternoon, and welcome, everybody. Please allow me to walk you through the financial highlights. Since the presentation has already been shared with you yesterday, I will go a little bit quick on to the slides because the key messages are already available for you. As far as highlights for the fourth quarter of '23, we've had THB 6.2 billion of gross synergies that we've been able to realize in this quarter. As mentioned by Khun Manat, 2.3% growth in service revenue has been witnessed in this quarter. At the same time, a very healthy EBITDA performance, 5% growth has been witnessed in this quarter as well, which is roughly THB 1.1 billion. And then last but not the least, as you have already seen, we've had a fantastic round of fundraise with a successful bond issuance in the month of January of about THB 10.5 billion. As far as the topline performance is concerned, there is strong topline growth, which is witnessed from the service revenue and product sales. If you look at the numbers here, the total revenue improved by 4.4% quarter-on-quarter. The service revenue improved 2% Q-on-Q due to higher contributions from mobile and online segments. The product sales improved 28.7% Q-on-Q due to the launch of the iPhone in Q3. It's always a seasonal quarter for us. And for the full year '23, the total service revenue remained flat on a year-on-year basis. If I go deeper into the different segments, and first, I'll touch the mobile business for us. There is a 2.3% growth in mobile service revenue driven by 1.9% growth in ARPU and higher subscribers. If I go on the slide from right to left, we've had a very good run in this quarter on the ARPU, where in both the prepaid and the postpaid businesses have shown a good growth in the ARPU. While postpaid has increased about 0.7%, prepaid ARPU has improved 5% on a quarter-on-quarter basis. And as a consequence, the blended ARPU has increased approximately 2%. We've had gain on subscribers as well. The prepaid subscriber increased about 1.7% Q-on-Q, mainly due to an increase in the tourist and the migrant segments, which are now comprising 70% of the total subscribers. And then as a consequence, the total service revenue has improved 2.3% quarter-on-quarter due to higher tourist influx, growth in migrant segment contributed by higher mobile service revenue aided by focused base management, and that's something we've been talking about for the last few quarters. If I go into the online business for us, we've seen a 2.5% growth in online revenues as well, which is driven by a continued increase in ARPU. If you see on the right-hand side, the ARPU improvement has been THB 17 this quarter, and this also shows a good run over the last 3 quarters for us. And that's basically coming on account of the subscription discounts that have been removed in our offerings. And at the same time, our continuous effort of making sure that the ARPU is benefited from the converged offerings that we are doing to our base. That is also helping us improving our ARPU. And then as a consequence, the online service revenue has improved about 2.5% on a quarter-on-quarter basis. For the fourth quarter as compared to the previous year, it's a 4% increase. The TV subscriptions remained flat on a quarter-on-quarter basis. As you can see from the slide, the ARPU is more or less flattish over the last few quarters. The subscribers are flat as well. And at the same time, the subscription revenues, which is the pink graph that you see on the left-hand side has more or less remained flat. Of course, there is seasonality in this quarter. That's why the other revenues, which is basically the concerts has slightly declined from the previous quarter. As far as the OpEx development is concerned, if you see the details of the OpEx, and I'll go one by one on the major elements here, the network cost declined about 8.4% quarter-on-quarter due to multiple factors. The number 1 is, of course, there were lower energy costs from the tariff reduction that had been announced by the government. At the same time, our efforts on operational excellence have borne fruit, and that's why the cost is down. And last but not the least, the tower reduction, which has happened because of the network modernization project, which has, at the same time, enhanced the customer experience is also resulting in a reduction in the network OpEx. The cost of sales has increased 24.5% in line with the increase in handset sales as well as you saw on the previous slide. The SG&A remains well managed and has actually declined 3.1% on a quarter-on-quarter basis as a result of our synergy benefits and also optimization of marketing spend in a seasonally high quarter. The other cost of providing services increased slightly by 3.9%, and that's due to seasonally high content costs that are typically there in this quarter 4. For the full year, the OpEx declined 11.2% on a year-on-year basis. If I then go deeper into the synergies and the next 2 slides are going to cover the synergies for Q4 and for the full year. The gross synergies have been benefited by multiple initiatives that have been recorded in EBITDA as well as below the EBITDA. From the left to right, you see gross synergies of THB 6.2 billion, integration costs of over THB 9.7 billion and hence, the net synergies of THB 3.5 billion. The split of these net synergies in THB 3.5 billion are in the areas that you see, THB 0.9 billion in EBITDA and about THB 3.8 billion is basically coming on account of the integration costs, which consists of the network modernization costs on CapEx and spends on organization modernization as well as we have consistently spoken about it in the previous quarters. Please note that the integration costs are one-off in nature, while the gross synergies will be a recurring benefit with the exclusion of the network procurement that you see on the red bar of -- which is about THB 3-odd billion here. Then if you look at the full year synergies, we've exceeded the target that we had set for ourselves of THB 0.25 billion in net synergies, and we end the year at about THB 1 billion in net synergies. Approximately THB 2 billion of these synergies impact the EBITDA and that's the reason why you see a good run in terms of EBITDA improvement for us. The net synergies, as mentioned, are THB 700 million higher than what we had expected, basically due to 2 big reasons. One is because of the acceleration of the organization's modernization program. we've delivered about 135% higher than our target. And then at the same time, there are -- it is offset by slightly high network modernization cost, which will help us keep a better experience to the customers going forward. Last but not the least, reiterating that the integration costs are one-off in nature, while the gross synergies are a recurring benefit exclusion of the benefit of network procurement. If I then look at the EBITDA performance, we have 4 consecutive quarters of EBITDA growth led by synergy realization. A total of what you see on the slide is a THB 3 billion growth in quarterly EBITDA since amalgamation from 19.5% in Q1 '23 to 22.5% in Q3 -- in Q4 of '23. Approximately 50% of the EBITDA improvement is coming from synergy realization. The EBITDA has also improved THB 1.1 billion on a quarter-on-quarter basis, which is the 5% that I indicated to you in the previous slide. The EBITDA-to-service revenue remained healthy and increased up to 55.4% for the fourth quarter of '23. Now if I move on to the net income. The net income has improved by about THB 1.2 billion on a normalized basis on a quarter-on-quarter basis. If you see on the slide, it was negative THB 1.6 billion in Q3 and on a normalized basis, a negative 0.4% in Q4, which is a THB 1.2 billion improvement. It is worthwhile to note that the net income in Q4 '23 was negatively impacted by a few onetime effects as follows: number 1 is impairment of redundant assets related to the network modernization program has been recorded to the extent of THB 7.1 billion. The second item is, again, onetime costs related to organization modernization project has been recorded to the extent of THB 1.9 billion. And the third one is loss from investments in associates and other write-offs of about THB 1.8 billion has also been recorded in this quarter. Please note that all of these are noncash in nature and are onetime in nature as well. So a total of THB 10.9 billion of these kinds of adjustments have been recorded in this quarter. Again, worthwhile to note that excluding these onetime effects, the net profit has improved to THB 1.2 billion, which is primarily coming on account of the EBITDA improvement that we've seen in our operations in this quarter. The CapEx for Q4 '23 was reported at THB 12.6 billion, which includes THB 5.8 billion of net integration costs, which is pertaining to the organization modernization project -- sorry, network modernization project. As far as the net debt profile of the company is concerned, as you can see, the net debt is more or less stable over the last few quarters. However, the big news is that the leverage ratio or the net debt to EBITDA has seen a sharp improvement in the fourth quarter, thanks to the good run that we have on the EBITDA. So from a 5.6% level in Q3, now we are down to 5.2% levels as far as the leverage is concerned. We've also indicated the debt maturity profile on the right-hand side for you. And then at the same time, as mentioned earlier, we've had a successful bond issuance in January '24 of about THB 10.5 billion. which is also going to help us to manage the debt maturities as when it falls due. Yes. I will round off this part of the presentation by recapping what was the synergy numbers that we had indicated to you and the operational guidance that was given during various times in the presentation during the Capital Markets Day as well as in the earlier quarters. As far as the growth synergies and the integration costs, we are delivering higher than what we had given as an expectation of THB 10 billion each. Gross synergies at THB 12.9 billion, Integration costs are THB 11.9 billion, and hence, the net synergies are approximately THB 1 billion, which is roughly THB 700 million higher than the estimation that we had given to you. And as a consequence, if you look at the operational guidance for the year, as far as service revenue is concerned, we had guided flat for the 10 months of operations for us on a year-on-year basis. Keep in mind that we've been in operation for 10 months post-amalgamation. So against the flat guidance, we end the year for 10 months at about 0.3% growth. Against the EBITDA guidance of low to mid-single-digit growth, we exceeded the guidance by reaching 6.7% growth on a year-on-year basis for those 10 months. And against the CapEx guidance of THB 25 billion to THB 30 billion, we end the year at about THB 21 billion, slightly lower than the CapEx guidance that we have given to you, which already includes the integration costs that I had mentioned earlier. Now please allow me to hand over to Khun Manat, who's going to talk about the strategy for 2024.

Okay. Thank you, Khun Nakul. Now let's move to our key strategy and focus this year. We put a significant amount of effort on integration, digitalization and organizational restructuring last year, which give us the -- the right path forward to realize higher synergy value at faster speed. 2024 is an important year for the growth and synergy realization, and we are very much on track for both. With the strategic focus, I will touch on, in a moment, we are confident to achieve core profit this year. We're now in a prime position to capture higher growth and create sustainable value to our stakeholders. Next slide, okay. Our priority is to improve the profitability, return on investment and free cash flow, hence, emphasizing on service excellence, innovation and value-driven digital offerings as well as original synergy across organization, which will be driven by the efficiency enhancement, redundancy elimination and optimization of cost for both OpEx and CapEx and leveraging on strength of the strategic shareholders. They have to be touched in the following. Next slide. We have continued to improve customer experience along with stronger network and spectrum portfolio. Our 5G quality is second to none as we solidify our network ability through an optimal mix of the highest mid-band frequency on top of our widest coverage, utilizing a low-band vacancies. Our network modernization and AI development enable us to deliver even greater service experience with targeted and precise investment leading to CapEx efficiency while responding to customers' usage each cell site. This should further drive our revenue growth along with an expanding 5G user base on 2x higher 5G top speeds. Technological advancement and generative AI also help in terms of quality acquisition and retention. We've been providing personalized support for active maintenance and end-to-end service to our customers. Service quality has improved as [indiscernible] required to service customers, [indiscernible] reduced by more than 50% after the adoption of automated process. In addition, the integration of physical and digital channels, including one service application, we will further add convenience to customers and enable us to offer them more relevant product and service alongside our seamless omnichannel experience. We're transforming ourselves from the telco-to-telco tech by combining our connectivity and business capability with advanced technologies. With our customer-centric approach and commitment to digitalization, we are confident to create better value listing products and innovative solutions for both consumer and enterprise segments. We believe there is room for growth on our core telecommunication services like 5G and broadband Internet along with enhancing customer propositions and our key strength on comprehensive personalized offering across large ecosystems. While amp-up growth opportunity will be from digital services and enterprise sectors, our ambition, as announced at the Capital Markets Day remains intact and be focusing well to achieve them. Next slide. As we keep expanding ecosystem, strengthening our comprehensive digital portfolio and utilizing AI to better provide personalize offering to both consumer and enterprise. We are confident to be the #1 choice for the customer and push growth higher this year. Our complete range of offerings and a large ecosystem are the key differentiators. This allows us to provide better value convergence or position to customers, including the values, lifestyle and digital content package on [ our ID. ] Smart living products, connecting cloud IoT devices, home entertainment, utility and energy solutions and fiber broadband via 2x to create a seamless experience and respond to today's digitalization need within the home. The OTT packages with a complete range of streaming and exclusive content from [indiscernible] and the other content partners and privileges across larger ecosystem of True dtac CP Group. And the partners nationwide. We believe this value dividend offering will contribute to our growth, pushing our ARPU and customer engagement higher as proven with our solid track record. Next slide. For broadband, the industry-wise, the country's broadband penetration is still underpenetrated with just about 50% household penetration compared to other developed country in the region, which saw a penetration rate well above 90%, so there's room for growth in the un-targeted areas. We also see positive momentum for broadband ARPU flowing market rationalization and I will continue to focus on quality subscriber growth. The offerings in the market are moving toward improving customers' experience as well as smart and content bundle, paving the way for future uplift ARPU with the largest portfolio and our pioneer in offering innovative products to value segments of our customers, we are confident to grow broadband revenue and market share for True. Next slide. True's diverse portfolio and cutting-edge technology enabled us to expand a launch of service beyond basic connectivity to smart digital solution that are customized for various vertical industry. Our strategy focus is on portfolio B2B solution, which draw revenue from beyond connectivity service up 29% year-on-year in '23 and continued promising outlook. Our clients' base have been enlarged across variety of the industry, including the agricultural retailer property developer, industry plan and transportation, as an example, we are the dominant leader in the provider connectivity for smart transportation, including the sole provider for Tesla and other leading brands. This listening on our unmatched superior network and widest coverage. We believe the enterprise sector has a significant growth potential due to the increasing digitalization of Thailand business sectors and our capability to serve such needs. Next slide. True is accelerating our transformation journey with clearly defined road map, 1 network, 1 operation, 1 team. The network optimization not only improved customer experience as mentioned earlier, but also leads to saving on our electricity and rental. Last year, we exceed our target for the site modernization. We are progressing to enjoy more saving this year while our customer 5G experience will be further uplift with the 2.6 gigahertz expansion. On the customer outage, our channel optimization initiative and automation process will help us reach and service customers more efficiently. We will also simplify and consolidate various applications for partners into, 1, to enhance efficiency further. Last year, we exceeded the channel synergy by 150%. Last but not least, we have modernized and restructured our organization and workforce with the rightsizing to become future-ready. We achieved 135% against our original target for the year. We are cultivating a performance-driven culture, while adapting to shift business landscape and changing customer demands. With this support from our major shareholder, give us a significant competitive advantage by leveraging CP group widest retail footprint across the country. Our presence is unmatched by others with over 12 million consumer exposure a day. We also benefit from the higher scale and better price point along with the global [indiscernible] power and best practice of CP Group and Telenor. The global expertise of our strategic shareholders has empowered us to enhance customer with high efficiency. This includes the knowledge sharing from the China Mobile on the customer management, 5G use cases for enterprise and AI auto-tune power consumption, which allow us to save energy consumption in each sales side, which up to 15%. We will continue to risk the bar on sustainability and maintain the #1 position to further elevate quality of life for Thais and transform Thailand into the digital economy. Okay. Let me hand over to Khun Nakul to walk through our '24 financial guidance.

Thank you so much, Khun Manat. Allow me to walk you through the guidance for '24, which is something that you've been waiting for. The industry is predicted to grow in line with the GDP forecast for Thailand in 2024. The latest forecast is roughly 2.5% to 3%. We would also see ARPU improvement in mobile and online segments and definitely higher contribution from our B2B business as what has already been seen in 2023, which Khun Manat also spoke about. And as a consequence, the service revenue is expected to grow 3% to 4% in 2024 full year as compared to full year '23. We are also committed to profitable growth, resulting in EBITDA improving faster than service revenue, something that we explained in detail at the Capital Markets Day as well. And we will continue to drive cost discipline in the operations as well. And as a consequence, we would expect the EBITDA to grow 9% to 11% year-on-year in '24 versus '23. The majority of our investments in network modernization will be taking place in '24 leading to CapEx synergies and also related integration costs. And hence, as a consequence, including the integration costs. As far as the CapEx is concerned, the guidance is approximately THB 30 billion, which is lower than the guidance that we had given at the Capital Markets Day. All of these efforts and the run rates that we have exiting Q3 -- Q4 '23 and going into '24, we expect the company on a normalized basis to be profitable in the year 2024. With this, I end my presentation and hand it over to Naureen for the Q&A.

[Operator Instructions] Before we proceed with the questions, we've received some common questions from many of you. So we'd like to address those first. The first question that we've received is please explain the one-off impacts to net profit. Khun Nakul, if you would like to take this one, please?

Sure. Thank you so much, Khun Naureen. Let me take that question first. As you saw in the slide that I had presented, there are 3 one-offs, all of which are totaling to roughly THB 10.9 billion in Q4. The first one is on account of network modernization, which has impacted roughly THB 7.1 billion in this quarter. Approximately 2,500 towers have been shut down during the year '23 as part of our network modernization project wherein the active equipment has moved from an existing tower to a new tower to make sure that the customer experience is enhanced for both dtac and True customers. As a consequence, in accordance with the TFRS the passive infrastructure, the obsolete active equipment from the dismantle towers and also the right-of-use assets, which are pertaining to the lease of the dismantle towers have been written off. As mentioned earlier, a significant portion of this write-off is only an accounting adjustment and is noncash in nature. These have been recorded on the other expenses in the P&L. The second one is on account of organization modernization where approximately THB 1.9 billion has been recorded in relation to this program, which has delivered significantly as far as the integration benefits and the synergy benefits for the year is concerned. This covers the full impact of any potential restructuring that is expected to happen in the next 2 years on account of the organization modernization. This accounting adjustment is also noncash in nature and any cash payout is expected to happen as and when this organization modernization progresses in the next couple of years. However, from an accounting point of view, full impact has been recorded in Q4 of '23. The third adjustment that we have in -- as far as the one-off is concerned, is on account of loss from investment in associates and other write-offs. This is approximately THB 1.8 billion. As part of the annual fair value assessment exercise, a loss has been recorded in a couple of our associated companies, which has been picked up on a proportional basis pursuant to the True Corp's share in those companies. Besides some other assets have been written off, which includes certain IT assets and all of it totals to about THB 1.8 billion. Approximately THB 0.9 billion of this amount is recorded in the line item share of results in subsidiaries and associates and another THB 0.9 billion is in other expenses in the financial statements. I would like to repeat that all of these items are mostly noncash in nature, are purely accounting adjustments and are one-off as well.

We have a follow-up to that question. Can you please guide us on further impairments to be expected in 2024? Khun Nakul, if you would?

Yes. I can take that as well. As I had mentioned, since approximately 2,500 towers have been dismantled in '23, for which roughly THB 7.1 billion has been recorded there is going to be further dismantle that's going to happen in the next couple of years as part of our network modernization program. The write-off for the network modernization, even though the number of towers dismantle will be significantly higher. And please note that the customer experience most definitely is not going to be impacted at all. The write-off is actually going to be lower than what you see in the year 2023, even though the number of towers dismantling is actually higher. And this is what I will explain as far as this question is concerned.

And just the last question we have, again, for you is if you could please elaborate on the guidance for EBITDA, which seems very exciting as well as for service revenue.

Yes. Actually, this was a common question that we got from almost everybody, and we've been giving some credit to the guidance here as well. But let me explain the rationale that we have used to come up with this guidance number. We've had a good end to 2023 as Khun Manat also explained. There are consecutive quarters of revenue growth. There are consecutive quarters of EBITDA growth as well. If we just extrapolate the Q4 '23 numbers, and assume no growth coming in 2024 on EBITDA and on service revenue, we are already hitting a 2.5% growth in service revenue and a 5% growth in EBITDA. And I would like to remind you the guidance that we have given is 3% to 4% growth in service revenue and 9% to 11% growth in EBITDA. As I mentioned, the industry is projected to grow in line with the GDP forecast of about 2.5% to 3%. So we expect to grow around those levels or slightly higher. The primary source of this growth is expected from ARPU improvement in the mobile and the online segments. And fourth quarter is one good example of where you see that ARPU improvement actually coming. And this is all thanks to the focused efforts on active base management that the ARPU improvement is actually going to come. Last but not the least, of course, the upselling efforts on conversion offers also plays an important part as far as this growth is concerned. On top, the tourism is expected to further increase in '24 and based on the latest numbers that has been given by the Tourism Authority of Thailand, approximately 35 million tourists are expected to come in '24 as compared to 28 million in '23. We've also given indicated numbers on what they will spend. And this is also going to stimulate growth because you know that our company True and dtac combined together, has a large share, larger than the normal market share that we have as far as this segment is concerned. Lastly, as explained by Khun Manat, the B2B business is expected to further contribute to True Corp's top line and, of course, bottom line as well. Where the beyond core services are expected to grow double digits in the year 2024, similar to the 23% growth that we saw in 2023. In a nutshell, as far as the EBITDA is concerned, as mentioned at the CMD, we are committed to profitable growth, resulting in EBITDA improving faster than service revenue through realization of synergies as we continue to drive cost discipline in the company. And we will obviously continue to work in a structured manner to reduce the gap versus competition as well as far as absolute EBITDA and also the OpEx as well, which we believe we can do over the next couple of years.

Thank you. Let us now move into the live questions from Zoom. First up, we have Khun Pisut. [Operator Instructions]

This is Pisut from Kasikom Securities. Yes, my face is quite big -- sorry. Yes. I have 4 questions. The first one, noticing that you have gained prepaying, but lost a bit on the postpaid in terms of subscribers in -- at the same time, your competitor was in the opposite circumstance. Just want to know that is this just the temporary market adjustment? Or is happening as per your strategic intention and what would be the economic rationale that you try to expand your prepaid subscriber base at the spend of the postpaid subscriber base? Also related to the question, Khun Manat mentioned about the fixed broadband market. That still has plenty room for growth in terms of the penetration to the household. And however, if you look at to fixed-broadband, subscriber was stagnant for quite some time. Could you please tell us a bit about what happened? And what is your strategy on this one going forward?

Khun Pisut, would you like to finish...

Yes. Okay. Yes. My second question is regarding your core revenue growth guidance of 3% to 4% that Khun Nakul mentioned about, first of all, the GDP growth, also about the tools liable and some other B2B segment. But it would be great if you can break it down into your growth target, especially for the mobile and also for the fixed broadband for this year. And my third question is I just want to clarify your financial target this year that you will turn profitable at the normalized level. My question is your normalized profit is going to be for the full year, starting from the first quarter or just for a particular quarter like in the quarter or -- fourth quarter, for example? And my last question is about the spectrum agreement with [ NT ] that's going to expire in 2025. What would be the most likely scenario or you expect it to happen after that? Would this possible for the spectrum auction event to bring back another round of the CapEx cycle for both spec and bandwidth purchase and also the network investment? How much spectrum rental fee on the net basis, will you be able to save under this scenario?

Okay. The first one on prepaid and postpaid subscriber base, I would like to request Khun Sharad, if you would please take that.

Yes. Thank you, Khun Pisut. You look is still quite good on the camera, not the bigger face for sure. Answering this one, as you heard the commentary from Khun Nakul as well as Khun Manat and our strategic priorities in the market. So we have a focus on both prepaid as well as postpaid segment. And if you recall, the one just presented by Khun Nakul, True mobile ARPU grew in quarter 4 2023 by about 1.9% quarter-on-quarter. And prepaid, of course, was 5% and postpaid 0.7%. And just to reiterate, that we are having a continued strategy on growth on prepaid with a continued encouraged arrival of tourist segment. This year, we believe 2023 about 28 million. This year, expectations are more than 35 million, which is quite comforting, which means that we will continue to grow in that area. Looking at the postpaid side, that is quite interesting. And we don't concern with the blip on 1 quarter and so on because our focus is quite clear is to sustain growth momentum based on the superior good quality network we have in the cup. What we are doing here in this area that we are moving from connectivity to lifestyle area, where we have quite a good product portfolio, starting from streaming, entertainment, gaming, insurance, EPL and King of Sport. Depending a variety of these services, we have ARPU uplift. And also on postpaid side, we are doing okay. But of course, we believe that moving the 5G base beyond 10.23%, which we entered on '23, we see a significant potential on moving 5G growth area, and there we see 10% to 15% ARPU uplift. I now move on to your second question, which was about our broadband strategy, which is also a very important arena for True Corporation. So of course, we don't look at past, we learn from past. If you look at our strategy and also based on what we have seen in 2023, you heard from Khun Nakul, our CFO, that we have gained about [indiscernible] ARPU in year 2023. The quarter-on-quarter growth was also about 3.5%, right? Having that base now, 2024, we have a clear strategy on broadband business and 2 strategic approaches cup. Number one, proactively protect and monetize base with customizable lifestyle benefits moving from so-called broadband connectivity to smart living in the cap. Then what we are talking about is that we are enhancing our network quality and coverage to enhance customer experience and strengthen the position as #1 best broadband network connected with a smart living. We have a very strong focus, and you will see progressively going on quarter-on-quarter on providing solutions on smart living like OTT VOX, CCTV, security package, home insurance, and there are a few more coming in the pipeline. I'm sure you have heard about the app called TrueX, which is home solution app. We are quite encouraged to see the growth in 2023 provided home solutions. So when you have broadband, of course, you have quite a good signal, you end up connecting devices. We really want to grow Home Solutions quite well in 2024. This is -- I was quite long, but this is our quite explicit celebration of broadband strategy. For question 3, we move to Khun Nakul.

Thank you so much on Khun Sharad to actually elaborate the strategy in a little bit more detail. Your third question, Khun Pisut is regarding core revenue growth. If you can break down into the mobile and the fixed broadband. Actually, we do not -- we haven't broken down the guidance into the fixed and the mobile broadband because as we had mentioned and explained very detailed by Khun Sharad, focus is on growing ARPU in both these businesses as what you have seen in the last quarter, specifically, where both the ARPU and the broadband business online as well as in the mobile business has grown. At the same time, the focus is definitely on growing subscriber base as well. On the mobile side, it's definitely going to be on the prepaid where more and more tourists are going to come in and migraines are going to be there as well. And of course, as far as broadband market is concerned, because it is underpenetrated, as the penetration improves, this is going to improve as well. So in a nutshell, we do not break down the guidance into the 2 businesses. But in general, we're indicating a 3% to 4% growth. Having said that, I just want to repeat, if we consider Q3 numbers and assume no growth in '24, we're already sitting at a 2.5% growth in service revenue for next year. Then your second question was a clarification on financial targets that when we will turn profitable on a normalized basis. Our guidance, just to reiterate, is to be profitable full year based on normalized numbers. Of course, the impact, if any of that's going to come on account of the impairment is not included in these numbers. And as I mentioned in the earlier question, the amount of impairment is going to be definitely lesser than what we have recorded in 2024 as far as the network modernization is concerned. So you can do your math and the number crunching based on the scrap. So for the full year, definitely, it's going to be profitable. We're not breaking down to the specific quarters here. The next one is on the spectrum arrangement, and I will pass it on to Khun Manat to answer this question.

For the spectrum strategy, we have done the spectrum strategy already. So -- but now the point is that we're waiting for NBTC to announce the spectrum auction and the caretaking rule, which this is very important for the operator to consider the operation afterward. The alternative of our mid-band of '23 and at which -- which -- by NT which we have the alternative of using the 2.3 after the auction or we have the other mid-band have to suppress this 2.3, but we have the funding vehicle of the spectrum cost, of pipe to do that. So that's a big key. So the key point is that, we have to -- we are waiting for the auctions from auction rules and timeline from the BTC from the regulators and also the carting rules, regulations. That's the point or other plan, already planned with us already.

Next up, we have Khun [indiscernible].

Yes, Okay. My first question is that you did a good job on cost reduction in the fourth quarter, especially on the network cost and also the SG&A. My question is that is it try to use the fourth quarter number asset base line for 2024? That's my first question. The second question is that why the impairment amount is expected to be lower than 2023 despite higher network optimization in terms of number. Can you clarify a little bit more on this? And my last question is about the synergy number. According to the number at Capital Market Day, the target synergy value and the implication costs are still the same and what we go to the P&L, especially for the electrification course. The reason I asked this question because in 2023, you mentioned that the synergy realized is like high than you expected. So I just want to confirm whether the number at Capital Market Day is still valid.

Okay. Khun Nakul, if you would like to take the first -- actually, all 3 of them.

Yes. Okay. Thank you so much for your questions Khun [indiscernible]. For your first one on whether the OpEx of Q4 '23 can be considered as the baseline for the next year? Yes. I think barring any potential effect that can come from inflation in specific, any hike in energy prices. which, obviously, the government has already indicated of what's going to happen in the month of April. He should consider these numbers as the baseline. And that's why when we explained the guidance to you, we say that let's keep Q4 '23 as a baseline and then you assume what's going to happen as far as the future is concerned. So most definitely, whatever cost programs we have run have brought the baseline of our OpEx to those levels that are sitting today. and there is going to be continuous improvement as we go forward, factoring in any potential adjustments that can come from inflation. Your second question on the impairment amount, and let me just try to explain this in a little bit more detail, right? So of course, the amount of network modernization is going to be higher in '24 as compared to '23. Yet the cost that we expect to incur on account of impairment is going to be lower than what is there in '23. The reason for that is, in Q4 '23, True Corporation has actually recorded decommissioning costs and certain penalty amounts for the -- all the towers that are expected to be dismantled over the course of the next 2 years. So basically, some of the costs for the entire network modernization program has already been recorded in Q4 '23. And as a consequence, the incremental that's going to be recorded in the year '24, for the additional towers that we're going to dismantle is going to be lower than what is already going to be booked as far as the year 2023 is concerned. Then your third question on the impact on the synergies. Actually, we've made it a little bit simple for us to explain the performance to you and for you to follow as well. That's why even though we had given the synergy numbers as far as the guidance that was given to the capital markets is concerned, we are now talking about our EBITDA performance. And then we are saying, of course, EBITDA includes the cost that needs to be incurred to get the synergies. It also includes the benefits of the synergies that we're going to get per se as well. And keeping in mind all of those factors, we are saying that the EBITDA growth is going to be 9% to 11%. The one element in the P&L that you have always seen is the expenses incurred on account of organization modernization which has completely been recorded in Q4 '23. So you will not see any incremental effect of integration costs on account of moderation in the P&L. There is going to be cash payout as and when the organization modernization progresses, but that's not going to get impacted in the P&L. So that's the simple answer. Please focus on the guidance that we have given, wherein we are talking about 9% to 11% growth in the EBITDA, which factors in everything, operational performance, the synergies, any costs that need to be incurred and overall growth in the business as well.

We would like to move on to the next person, [ Ranjan ].

Two questions from my side. Firstly, on the wireless revenues for the industry, if you can share your expectations on how much you think the industry could grow in 2024. And? The second question is, I'm wondering why the service revenue guidance is not higher. If I just look at your wireless revenues for fourth quarter, and then analyze that, it come to like 2.5% growth in wireless revenues alone. And then you are improving ARPU and you're talking about growth in customers. So just wondering like what's behind the 3% to 4% service revenue guidance? Based on everything you've said and delivered, it should seem to be higher.

Nakul, I believe both of those are for you.

Yes. I think when you were getting the questions earlier, it was more about how confident are you to deliver on those guidance. And thanks , based on the exploration that we've given now, [ Ranjan ], you are challenging us whether the guidance is conservative equity. But I mean just explaining this in a little bit more detail. Of course, there is a good momentum as far as the end quarter 4 is concerned. We do expect the ARPU improvement to happen. Of course, it's not going to be a very significant improvement in ARPU because we will focus on active base management as we have done in the last few quarters. And as you've seen the unlimited packs have been taken out to the market, it is generally starting to show some improvement in the industry as such in terms of the ARPU is concerned. Of course, tourist influx is going to be there as well. So we do believe that this guidance is what we stand behind. I mean, of course, the focus of the entire organization is actually on integrating the companies and delivering the synergies as well. And doing all of this at the same time, we believe that the 3% to 4% growth in revenues is what we would like to aim for and that's what we see as far as the industry growth is concerned as well. You also see the GDP guidance that's been there, it's roughly 2.5% to 3%. So in a way, the 3% to 4% is actually higher than the GDP growth that you will probably see in the country in the year 2024.

We'd like to move on to the next person, Arthur.

Just several questions, please. Firstly, with regard to the move to profitability a year ahead of initial targets. I'm just wondering when this essentially change for you to revise the guidance to profitability? I understand you are slightly ahead in terms of synergies you're booking around THB 1 billion versus your target around THB 0.2 billion to THB 0.3 billion. But is there any other item which actually push you to advance the target on profitability? Then the second question is with regard to -- it's a housekeeping question. For the assets that you have impaired, what kind of cost worthy generating on your P&L? I assume some of them would have been depreciation.

Okay. Nakul?

Okay. Thank you for your question, Arthur. Let me just try to recall. The first one is -- see, yes, we have given a guidance on profitability for the next year, and that's based on the underlying performance, excluding the amount of the write-offs. It's coming on account of a few factors. Of course, we are quite pleased with the performance that we have and you specifically mentioned that our target on the synergies is higher than the number that we had indicated earlier. Then also at the same time, if you look at the EBITDA performance of the company, we had given a guidance for the year '23 for 10 months, to be low to mid-single-digit growth, and we exceeded that guidance as well. And that guidance, of course, is contributed by better synergies and also better operational performance of the company as well. As far as our top line is concerned, we've had 3 consecutive quarters. As far as EBITDA is concerned, we've got 4 consecutive quarters. And our overall way of work in this company, integrating these 2 massive companies together from a people standpoint, from a technology standpoint, from an operational standpoint has given us the confidence that we can deliver better than what we had expected earlier. So it's a combination of multiple factors. Of course, people has a lot more important part to play because everybody knows how to run operations. but to integrate a culture of 2 companies together into 1 and then deliver is actually the secret sauce that we are working on. The CEOs are contributing very well in leading the whole organization together. Then your next question on impairment, what is it -- what is the -- yes. So the integration -- sorry, the impairment cost that we've recorded, specifically on the network modernization flow through into the P&L of the company. So in a normal course, some of these assets would have been depreciated over a period of time. But now most of it are no longer in news have been flushed out and impaired in accordance with the accounting standards or the TFRS. So the effect of this would have been into the line item of depreciation and amortization, and that has been recorded upfront in Q4 '23. We should obviously mean I don't know there is going to be a follow-up from you. The DNA is expected to then be lower to this extent going forward.

Can we move on now to Wasu?

And I have 4 questions. The first one is about the debt you have. So you mentioned in one of the slides that you need to -- you will have to refinance THB 24 billion of debt this year. So how do you plan to refinance that debt? And what is the proportion of bond versus bank loan? So that's the number one question. Number two, do you target positive free cash flow in 2024? Question number three, how much [indiscernible] in terms of the impact on new subscribers coming from the premade identification regulation from the NBTC this year? And my final question is about the handset margin. In 2023, True's handset margin was negative 6% versus handset margin of positive 2%. So why is there a difference between the 2 companies in terms of the handset margin? And for the handset subsidies, that's True focus the subsidies on postpaid or prepaid growth? Those are my questions.

I'm a bit conscious of our time. We are already over time. Let's start first with the handset margin question for Khun Sharad, and then we take the rest from Nakul. Okay. Sorry, how much impact do you expect from NBTC subscribers?

Okay. Okay. Sure. Thank you, Khun Wasu, good to see you again. According to the reunification and notification individuals who hold more than 100 mobile SIM cards must identify SIM cards by February 14 as well as there is a second more condition, which is about 60 to 100 SIM cards. So we are fully complying with NBTC regulations. We do see there may be some impact but we are minimizing this impact through 2 things. One, making our realification process quite robust across all channels. And second, our teams are also discussing with NBTC in terms of timeline as well as simplifying the complexity in terms of classification of subscribers. So we are pretty confident on lending on this well.

We move on to Nakul.

Yes. Let me take the rest of the questions quickly, Khun Wasu. The first one on the refinancing of the debt in '24. As we've indicated earlier, the primary source of the funds for us is definitely going to be tapping into the bond market. And the fact that we've got a very successful bond issuance that happened in the month of January is actually a testimony to the ability of the company to refinance the debt have raised from the board market. I mean you know probably better than us how right the bond market is as far as this country is concerned. And the companies which have a good credit, specifically in our case, where we have a rating of A+. Our ability to tap into the market give confidence to the borne investors is actually very high. So that's going to be our primary source of fund going forward. We also have unutilized facilities on bank loans to the extent of THB 10 billion, which are not drawn down as of 31st of December, which, if we want, we can tap into. But like I said, we definitely want to tap into the bond market. And in addition, the True Corp is going to continue to explore other sources of funds, including any offshore borrowings as well, maybe specific to Japanese yen also. Then your other question on the target free cash flow. I mean, we are not giving any free cash flow guidance for the year. I mean, we will stick to what we've mentioned as far as our EBITDA guidance for the year and also the CapEx spend. But I would tend to say that the free cash flow is going to pretty much go in line as far as the net income development of the company is concerned, if you are looking for some sort of [indiscernible] actually to that. And then your last question is actually interesting. I mean, as far as the handset margin is concerned, actually there is more to it than what meets the eye, I mean -- and the reason why I say it is that based on what you see in the financial statements, the reason for the difference in the handset margin of the 2 companies is basically on the different accounting practices that True Dtac have and what our competitor has. So it is not actually comparable. And from what we see in the market, and that's most important to know, the subsidy levels that you see in the market for all operators across is pretty much the same levels, except for certain tactical differences here and there where certain products, certain handsets, which are slightly old into your inventory are being flushed out. But other than that, the subsidy levels are pretty much the same. So don't read too much into those numbers. It's just the accounting difference between the 2 companies that is giving you an indication that the handset margin is different, subsidy there was a pretty much the same as what you see. That's how...

Thank you so much. Unfortunately, we are already overtime. I have to apologize to all of you who are still waiting to ask questions. Please feel free to get in touch with me. I will also reach out to you after today to address your questions and concerns. Thank you so much. Have a great day. We will be hearing -- or you'll be hearing from me soon. Thank you.